More Wrongheadedness from Sen. Warren on Notice and Comment Rulemakings
Under the Administrative Procedure Act, federal agencies are required to undertake certain procedures when they promulgate rules of general applicability. First, the agency announces a proposed rule in the Federal Register. Then, the agency takes comment on the proposal from the public. Finally, after considering the public input, the agency promulgates a final rule, which must be accompanied by concise statement that explains the rule and also responds to comments. This sequence is known as “notice and comment rulemaking.”
Sen. Elizabeth Warren (D-MA) thinks this process is unfairly titled towards industry, but her arguments make no sense. In my previous post, I debunked Sen. Warren’s baseless critique of the pre-rulemaking process. In this post, I’ll discuss her criticisms of the rulemaking process itself. Here’s what she writes:
But corporate players are savvy. They have learned that those same judicial review standards can be used to suffocate new rules. They play a sophisticated game—leveraging their own expertise and paying outside experts with purportedly independent credentials to produce long, detailed comments filled with data and analyses, all selectively produced to serve their own interests. This push to bury agencies in detailed, self-serving comments slows the process massively, and their overall dominance of the notice-and-comment process results in rules that are longer, more complicated, and more to the liking of the most powerful players in the game.
There’s so much nonsense in here, it’s difficult to know where to begin. Major regulations often exceed a thousand pages of complex subject matter. Not infrequently, these rules have costs in excess of $100 million, even $1 billion. The regulated entity is on the hook for these costs. By statute, these entities are entitled to submit comments on these technical rules to which they will be beholden. In so doing, the regulated parties of course will “produce long, detailed comments filled with data and analysis”; they’d be crazy not to. And of course their comments are “self-serving”—what business in its right mind wouldn’t want a voice in a process that that could lead to millions of dollars of compliance costs? Also, who else beside themselves would they serve? Sure, the comment process results in longer and more complicated rules. According to Sen. Warren, the complexity of rulemaking is suboptimal because:
These procedures tie agencies in bureaucratic knots and bleed much-needed resources. Often agencies just give up entirely on writing new rules … Yet, even if an agency manages to jump through all of the procedural hoops and withstands all the pressure, and actually ultimately issues a final rule, companies will sue. And the rules governing judicial review favor those who would stop the agency from acting in the public interest. Under the law, it is easy for business groups to challenge a rule for being too strong or too restrictive. But it is much harder for public interest groups or ordinary citizens to challenge a rule for being too weak or riddled with loopholes. And it is nearly impossible to challenge successfully an agency for not acting at all.
Sen. Warren’s explanation is gobbledy-gook. For starters, it’s absurd to claim that notice and comment rulemaking are so resource-intensive that agencies “just give up entirely on writing new rules.” Her evidence of this proposition is the fact that agencies often issues rules late. But issuing a rule after a deadline is different from giving up on a rule. It means the opposite—that the agency stuck with the rule even after the deadline.
Sen. Warren is similarly nonsensical when she claims that it is “easy for business groups to challenge a rule for being too strong or too restrictive,” but that it is “much harder for public interest groups to challenge a rule for being too weak.” Regardless of whether a litigant seeks to tighten or loosen a given rule, the argument is the same: the court should reject the rule because it violates its authorizing statute. I don’t see how one side has it inherently “harder” or “easier.” Ultimately, it depends on the rule.
Finally, Sen. Warren is off base when she claims that “it is nearly impossible to challenge successfully an agency for not acting at all.” In fact, these suits are common. As I explain here, environmental special interests file such “agency forcing” litigation to usurp the EPA’s priority setting process. These suits are known widely as “sue and settle.”
I believe that Sen. Warren has it backwards. Although it’s tough to know for sure because so much of her argument is groundless, it seems her point is that the notice and comment system gives industry a leg up when it fights regulations in court. Yet the reality is that notice and comment rulemaking is a tremendous aid to the government during judicial review of agency regulations. An industry’s legal challenge is limited to issues that the regulated entity brought up during the rulemaking. The result is that the agency in the notice and comment process is given the opportunity to vet a challenger’s argument before the legal fight begins. The regulated litigant, by contrast, has to wait until judicial review beings before it learns the agency’s tactics. This is a big strategic advantage.
I should note here that I did not come up with the argument that the notice and comment process favors the government during judicial review of the underlying rule; rather, this excellent point was advanced first by Jeffrey Clark, a partner at Kirkland & Ellis, during a hearing before the House Judiciary Committee on May 17.